Faulty classification led APGCL to forego Rs 1.17 cr, says CAG

Staff Reporter

GUWAHATI, April 25: Assam Power Generation Corporation Limited (APGCL) had to forego ‘efficiency incentive’ amounting to Rs 1.17 crore due to incorrect classification of a hydroelectric project that was eligible for higher incentive.

This has been observed by the Comptroller and Auditor General of India (CAG). According to the CAG report on public sector undertakings (PSUs) for the year ended on March 31, 2017, the Assam Electricity Regulatory Commission (AERC) notified the terms and conditions for determination of Tariff Regulations, 2006. According to the regulations, APGCL was entitled to receive an ‘efficiency incentive’ when the capacity index exceeds 90 per cent for ‘purely run-of-river power generating stations’ and 85 per cent for ‘run-of-river power station with pondage’. This, according to the CAG report, was applicable in case of all generating schemes, including new generating stations from the first year of operation.

APGCL, according to the report, commissioned the 2x50-MW Karbi Langpi Hydroelectric Power Project during March 2007. As per the detailed project report (DPR), the company was to classify the project as a ‘run-of-river project with pondage’. The company, however, classified the project as a ‘purely run-of-river project’ while submitting (June 2014) the true-up petition for the year 2012-13 to the AERC. Based on APGCL’s submission, AERC allowed (November 2014) an ‘efficiency incentive’ of Rs 0.58 crore vide its tariff order after considering the standard capacity index of 90 per cent.

According to the CAG report, the company submitted (December 2014) true-up petition for the year 2013-14 to the AERC. Audit observed that in the true-up petition for 2013-14, the company admitted its mistake of wrongly classifying the project in the true-up petition for 2-12-13 as a ‘purely run-of-river project’ instead of a ‘run-of-river project with pondage’. The AERC, accordingly, allowed an efficiency incentive at the standard capacity index of 85 per cent for the year 2013-14.

The company, however, could not recover any efficiency incentive for the years prior to 2013-14 due to incorrect classification of the project. Audit observed that the company could have received an additional efficiency incentive of Rs 1.75 crore for the year 2012-13 had it correctly classified the project as ‘run-of-river project with pondage’.       

In its reply in November 2017, the government admitted that it had not claimed the incentive for the year 2012-13, and that the company started filing the claim from 2013-14 after coming to know that the project is a ‘run-of-river project with pondage’.